06 February 2012

Neville for Chancellor

Brad DeLong, the Berkeley economist, has a nice piece on how Neville Chamberlain was right.

Britain recovered from the great depression faster than the US, and faster than we are recovering from the current depression. DeLong gives credit to Chancellor of the Exchequer Chamberlain who ignored the orthodox calls for austerity and implemented a policy of fiscal stimulus. Unlike his successor today:
The failure of expansionary austerity in Britain should give all of its advocates around the world reason to reflect on and rethink their policy calculations.
...if expansionary austerity is not working in Britain, how well can it possibly work in countries that are less open, that can’t use the exchange-rate channel to boost exports, and that lack the long-term confidence that investors and businesses have in Britain?
You don't need to be a Keynesian to get it right.

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